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Shareholder Agreements

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What is a Shareholder Agreement?

In a large corporation, the roles and rights of the shareholders are defined by the constitutional documents. These often allow for the free exchange of some or all of the investors’ shares on the open market. Naturally, in the case of smaller business concerns, this type of fungibility is not practical and can be detrimental to the operation of the business. That’s where a shareholder agreement comes into place. A shareholder agreement is a document that supplements the constitutional documents to place additional restrictions on investors.

The Importance Of A Shareholder Agreement

All investors have legitimate concerns when it comes to the stock in a company in which they’ve invested. Who else will be able to hold shares of the company? Who’s going to manage the business? What will occur upon a shareholder’s death, disability, or termination? How will the shares’ value be determined? Before any company incorporates, questions like these need to be addressed by both the management and the investors. Once these matters are decided, they need to be detailed in a well-written Shareholder Agreement. This can prevent things like the shares in the company being sold to an undesirable investor, shares transferred in such a way that would cause an imbalance of power, or shares being sold at an inappropriate value.

For a more detailed look at Shareholder Agreements, click here.

Experienced Virginia Business Formation Attorneys

The Business Division attorneys of Hale Ball has extensive experience in preparing shareholder agreements for their Virginia corporate clients. For decades, the Business Division lawyers have been preparing the legal documents that are necessary to form, operate and expand businesses into corporations. This experience has proven invaluable to the business owners who come to us. After forming many hundreds of businesses, our lawyers are familiar with the issues and concerns that could affect our Virginia corporate clients. At Hale Ball, we believe that the most effective way to avoid future legal battles it to create solid and clear shareholder agreements.

Hale Ball serves new and existing businesses in Fairfax County, Fauquier County, Arlington County, Prince William County, Louden County, Vienna, Tyson’s Corner, Leesburg, Manassas, and other parts of northern Virginia with their business formation and transformation needs.

To schedule an appointment with an experienced corporate and business attorney, contact us at 703-763-4687.




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